Calculating the True Strength Index and Using It with Moving Averages
Summary
The article explains the True Strength Index (TSI), a momentum oscillator developed by William Blau, and outlines how to calculate it as a custom MQL5 indicator. It smooths price changes and absolute price changes with two successive exponential moving averages, then scales their ratio. The discussion describes interpreting TSI relative to its zero line, using a signal-line crossover, and looking for overbought or oversold conditions and divergences. It recommends interpreting signals alongside other price-context tools.
The implementation section covers indicator buffers, configurable smoothing periods, and displaying the result in MetaTrader 5. It also describes using the custom indicator in an expert advisor and combining TSI with two moving averages to generate buy and sell signals. The article is primarily a coding and indicator tutorial; it does not provide backtest results or evidence that the described signal rules are profitable. Indicator readings and crossovers are presented as analysis inputs rather than stand-alone proof of market direction.
Key ideas
- TSI measures momentum by comparing smoothed price changes with smoothed absolute price changes.
- The described calculation applies two successive exponential smoothings to both series before taking their ratio.
- A reading above or below zero is presented as a bullish or bearish momentum indication, respectively.
- The article demonstrates creating a configurable TSI indicator and using it in an automated system with moving averages.
- It provides implementation guidance but no performance evidence for the example trading rules.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.